Distributing bonuses to hourly employees is an effective way to motivate and reward them. Unfortunately, many companies are not in a position simply to throw money at an employee every time he achieves a measure of success. A company should look at its finances, allocate money properly and award it where merited. This enables the employer to distribute bonuses without causing unnecessary financial strain.

Step 1.

Allocate funds for bonuses when developing your budget. The amount available will depend on your company’s success, your projections for the coming year and the number of hourly employees.

Step 2.

Establish the amount of each bonus. It can be a flat amount (such as $1,000 at year end), it can be a percentage (such as 3 percent of the employee's yearly salary), or it can be an addition to the hourly rate (one and a half times the hourly rate when the employee reaches a threshold).

Step 3.

Set the time and frequency with which the bonus will be paid. For example, pay the bonus at year end, quarterly, monthly or upon completion of special projects or perceived exceptional work. If the bonuses will be paid based on performance, set a cap so you do not go over budget.

Step 4.

Distribute the bonuses according to the plan. Include the extra money in the employee’s paycheck or as a separate check. If you are giving many bonuses, it is more cost-effective to include the funds in one check as opposed to issuing separate ones.